Question
Roxanne invested $760,000 in a new business 6 years ago. The business was expected to bring in $9,000 each month for the next 20 years
Roxanne invested $760,000 in a new business 6 years ago. The business was expected to bring in $9,000 each month for the next 20 years (in excess of all costs). The annual cost of capital (or interest rate) for this type of business was 8% with monthly compounding. What is the value of the business today? (Enter just the number in dollars without the $ sign or a comma and round off decimals to the closest integer, i.e., rounding $30.49 down to $30 and rounding $30.50 up to $31.)
Interest rate=8% monthyly compunding that is 8/12=0.67% per month for 20 years that is 240 months.
Monthly cash flow=$9,000
Present value=9,000*PVAF(0.67,240)=9,000*119.20=1072800 . INCORRECT
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